CCTA lobbies for less regulation, more new media funding in latest campaign

The recent spate of media mergers across North America, combined with the growing proliferation of the Internet, has given the cable industry the ammunition it needs to lobby for substantive changes in how broadcast distributors are regulated in Canada. The first phase of its multi-stage campaign was unveiled April 3 at the Canadian Cable Television Association conference in Toronto. Entitled E-TV, The Integration of Culture and Commerce, the CCTA released a 34-page report outlining its vision for regulatory reform, one that allows for more integration between cable and broadcasting, a higher threshold for foreign ownership and greater reliance on regulatory exemptions. The Faces Behind the E-TV ReportIf anyone knows how to influence communications policy these days, it's the three former CRTC executives who now work for the CCTA. It started last summer when the association appointed a new president and CEO, Janet Yale, who had been director general of the CRTC's Cable, Pay and Specialty Services Branch, and director of Telecommunications Policy at the CRTC. More recently, she worked in senior VP positions at AT&T Canada.The main authors of the E-TV report are Michael Hennessy and Suzanne Blackwell, both former senior officials with the CRTC.Appointed to the cable association in November, Hennessy was previously VP, government & regulatory Affairs for Bell Mobility and for Mobility Canada. Hennessy's tour of duty at the CRTC was as its director general of Competition, Convergence and Social Policy. During his 14 years with the commission, he advised on such matters as competition policy, deregulation, convergence of telephone company and cable activities and privacy.Blackwell, who also joined the CCTA in November, was appointed to the position of VP, economic research. Like Yale, she also worked in a senior capacity at AT&T Canada. She also rounds out the trio of CCTA executives who have worked at the CRTC. Blackwell held various positions during her eight years at the commission, including chief of regulatory policy in the telecommunications branch."When AOL-Time Warner can buy up more cable subscribers than we have in all of Canada, as part of a merger, we can't argue we're dominant in the emerging marketplace," CCTA president/CEO Janet Yale told delegates at last week's conference. "When BCE can control the telephone companies in Ontario and Quebec, the Atlantic telephone companies, the mobility companies, a major Internet company, a major international carrier, and now, perhaps, a national television network, you can't argue we shouldn't be free to integrate." Much of the CCTA's wish list isn't new, but the strategy for carrying out its campaign over the coming months is. The association hopes that by adopting a consultative rather than a confrontational approach, it can persuade the regulator that its vision for a new communications policy is shared by others. The CCTA says it will meet with representatives from various industry sectors, including broadcasters, producers, creators and the IT sector, to flesh out a more detailed strategy. It plans to present detailed structural proposals to the government by year's end. The association also hopes to involve various government agencies and departments in its consultation, and has called on the CRTC, Industry Canada, Canadian Heritage and the Competition Bureau to work together to formulate a new policy approach to technology, culture and commerce. "This new framework should provide an integrated approach to issues associated with information technology, communications, media, copyright, competition and culture," the E-TV report states. The association also wants the government departments to form a working group that would work within government and with the private sector to deal with targeted issues. The CCTA's wish list The cable association has presented a grab bag of initiatives that it argues are necessary to accelerate the transition to interactive digital television. Creating a larger funding pool for the creation of Canadian new media content is one of the report's main recommendations. But rather than mandate contributions to a new media fund, the CCTA says the regulator should adopt an incentive-based approach. One idea would see new media projects granted a larger slice of TV and film production funds, such as the $200-million Canadian Television Fund (CTF). The CCTA also wants the commission to permit broadcast distributors to divert part of their mandated content payment to equity in new media companies. Under the current system, cablecos are required to contribute five per cent of their gross revenues to production funds like the CTF - an amount the cable industry would like reduced. The CCTA report says the commission must "come to terms with the reality that old media and interactive networks are all part of the same picture. If we take too long to figure that out, we will miss some opportunities that are going to happen as old and new converge. AOL was just a wake-up call." Ownership of specialty TV channels and broadcasters is another issue raised in the report. Specifically, the CCTA wants to see barriers lifted that currently limit broadcast distributors to a minority stake in broadcast licensees. In keeping with that theme, it also wants the genre protection rule for new TV channels lifted to allow competition between pay and specialty services. Easing the CRTC's workload is another priority, both within and outside the commission. The regulator acknowledged as much in its Part III budgetary estimates released last week, saying it plans to rely more on mediation to resolve industry disputes. CRTC chair Francois Bertrand reiterated the need for strong reliance on dispute mechanisms at last week's CCTA conference. But she warned that if mediation fails, the CRTC is prepared to force a resolution. "We strongly believe in making continuous use of (alternative dispute resolution) to resolve administrative and technical issues among carriers and in resorting to staff mediation and dispute resolution techniques to resolve issues on a more timely basis," she told CCTA delegates. "However, if these alternative avenues fail, the commission will not fail to intervene where necessary to ensure fair and sustainable competition in order to better serve Canadians." The CCTA says the CRTC can free up significant resources by making greater use of broadcasting exemptions. Exempting small cablecos, it says, would be a good starting point. On the telecom side, the association says 20 per cent of resources would become available if the commission were to forebear small independent telcos from regulation. "Similarly, the paper burden on small cable systems under 20,000 subscribers is significant," the E-TV report states. "It is not clear that small companies are in a position to exercise any degree of market power and such systems should be exempt from regulation, subject to minimum requirements with respect to essential facilities or to promote Canadian services." The CCTA goes onto say that the onus should rest with the regulator to demonstrate when regulation is necessaryAs expected, the CCTA has also laid the groundwork to transform community channels into profit-making enterprises, albeit ones that still serve a strong public policy objective. The report suggests a model that would see community channels carry all Canadian content that is either local or regional in nature. Revenue would come from advertising on the community channel itself, and from using the ad avails of U.S. specialty channels. "The key to a viable business model would be commercial revenues from transactions and advertising," the report notes. "Over time, these revenues can be supplemented by interactive advertising revenues from web enhanced (HTML based) TV applications. The revenues from these activities could, in turn, generate additional dollars for new media."There's no doubt that some of the recommendations in the report will find favour with some players in the telecom industry. The raising of foreign ownership rules to allow for easier access to investment capital is one such recommendation, as is the CCTA's request that cablecos and telcos be allowed to purchase each other's systems outside their licensed territories.

CCTA lobbies for less regulation, more new media funding in latest campaign

Broadcast | April 13, 2000

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